GOP Can't Rely On Money Advantage Now

For years, Republicans could survive mistakes in congressional races and still gain new advantages because they always had more money than the Democrats.

Those days are over now, and not in some incremental way.

Consider a few facts:

• The U.S. Chamber of Commerce is working to raise $40 million to help its Capitol Hill allies; the labor unions are vowing to spend $400 million this cycle.

• In 2006, candidates who captured open House seats spent an average of about $1 million for an easy win (more than 60 percent) and about $2.5 million for a relatively close one, according to the Campaign Finance Institute. House Republicans have $7 million in the bank to help defend 30 open seats this cycle, and not a single one can be considered easy after Tuesday’s Mississippi upset.

• Fundraising-challenged Senate Republicans have long relied on the Republican National Committee to bail out their candidates. This year, Arizona Sen. John McCain has already laid claim to all of the central committee’s cash to boost his financially strapped presidential campaign. There will be no help in the wings.

“This may prove to be one of the worst cycles for Republicans in modern history,” said Anthony Corrado, a nonpartisan campaign finance expert. “The landscape is against them, voter opinion is against them, and they don’t have major reasons for the party faithful to give, particularly given the prospects of Democratic gains in both the House and Senate.”

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Republican leaders are trying to blunt the shift, arguing to donors that they must give to avoid facing an unchecked Democratic Congress teamed with a Democratic presidency.

“There is no question, it doesn’t help fundraising,” said Rep. Eric Cantor (R-Va.), the chief deputy minority whip in the House. “But that is no excuse. We have to go out there, put the throttle down and make the case that what’s best for the county is [for Republicans] to be in the majority.”

But it’s an argument that even insiders concede seems wistful in light of three straight losses in special elections in Republican districts.

“At this point, without a major redirection, our allies will put their resources behind holding the presidency rather than what appears to be a fruitless effort to take back the House,” retiring Rep. Tom Davis (R-Va.) said Wednesday in a memo to members.

The upshot is that Republicans will face an abysmal election environment without one of their most potent and reliable weapons: an ability to pour millions into advertising, direct mail or voter turnout and tip the scales of close elections to their advantage.

The reasons for the turn of fate are many, and most predate the 2006 Democratic takeover of Congress and President Bush’s sagging popularity, although both factors clearly accelerated the change.

In the late 1990s, the Republican Congress was in its heyday. The Clinton administration was embattled and former House Majority Leader Tom DeLay’s K Street project was fully operational.

Hundreds of Republican aides were making their way from Capitol Hill into the city’s plush lobbying shops, where they could earn big money and make big campaign contributions to their former congressional patrons.

Meanwhile, the schedules of powerful Republican chairmen were jammed with time allotted to dial for dollars. CEOs, some with business before the chairman’s committee, were put on notice that donations — big, unlimited ones — were due.

Those so-called “soft money” donations neutralized similar contributions collected by Democrats from labor leaders and allowed Republicans to use a large pool of small donors to outraise the competition.In 2000, for instance, the NRCC’s financial advantage was larger than $100 million. With such deep pockets, the committee spread the battleground. For sheer sport, it seemed, the group forced then-House Minority Leader Dick Gephardt (Mo.) to spend nearly $6 million to save his seat.

Passage of the McCain-Feingold campaign finance law two years later delivered two blows to the Republican machine. It banned “soft money” donations from businesses and prohibited chairmen from soliciting those checks. The bonds between the party and its celebrated corporate backers were further tested with passage in 2002 of the Sarbanes-Oxley legislation, which aimed to curb corporate crime. And the relationship suffered even more harm when Republicans refused to exercise some fiscal restraint of their own and federal deficits soared.

Were they really so different from the Democrats? Some business leaders began to wonder.

Such questions made it easier for corporate donors to begin hedging their bets in 2006 when Democrats seemed poised to gain ground. As November approached, donations from businesses’ political action committees, or PACs, began showing some partisan parity.

Corporate America’s political adjustment accelerated after Election Day. In the first nine months of 2007, such PACs gave 57 percent of their contributions to Democrats, as compared to 43 percent in 2005, according to the Institute’s analysis.

Some shifts were dramatic. For instance, the percentage of Home Depot’s giving to Democrats soared from 13 percent to 46 percent. Eli Lilly, the pharmaceutical giant, increased its Democratic giving from 24 percent of its contributions to 51 percent.

Worse still, Republicans witnessed some of their own giving to their former partisan adversaries. Among them: Former Rep. Bob Livingston, the Louisiana-congressman-turned-lobbyist whom Republicans once nominated to become their House speaker.

As Republican donations shrank, Democratic giving exploded to both candidates and activist groups.

Most importantly, during their time in exile, the Democrats mastered the future of fundraising — online organizing that can lead to massive giving — and built new, more muscular outside allies to bolster their voter appeals.

Today, most Democratic incumbents are vastly outraising their rivals, Democratic candidates for open seats are banking more than their adversaries and many Democratic challengers of sitting Republicans are racking up enough cash to wage competitive fights.

MoveOn.org, a liberal online group that primarily collects small donations, is already running advertisements against Republicans on the Democratic Congressional Campaign Committee’s wish list of 76 targets.

Of the top five best-financed independent groups, or 527s, that will run ads or conduct voter turnout operations in November, only one is run by Republicans. Of the total giving to those groups, 41 percent of the money comes from labor unions, 36 percent from individuals and just 2 percent from corporations.

Meanwhile, the Democratic donor pool continues to grow as the well-worn trail from Capitol Hill to K Street takes on a distinctive blue hue.

Just this week, Patrick G. Heck, the former chief tax counsel to the Senate Committee on Finance and a former senior adviser to Chairman Max Baucus (D-Mont.), joined Kirkpatrick & Lockhart Preston Gates Ellis LLP.